The World Trade Organization (WTO) released the World Trade Report today. Here are some excerpts:
[E]ven a crisis as devastating and unprecedented as COVID-19 has not resulted in the wholesale unravelling of trade and integration.
[W]hat became clear over subsequent months was not only how quickly supply chains adapted and new producers emerged, but how the key to greater diversification lay in expanding and facilitating trade with other partners, not restricting or reshoring it.
According to the WTO’s monitoring reports, a majority of COVID-19-related trade measures recorded since the outbreak of the pandemic were trade-facilitating. Even in the heavily impacted services sector, most COVID-19-related measures were trade-facilitating.
Developed economies have been able to respond to the COVID-19 crisis with massive fiscal stimuli and far-reaching income support. (…) However, these same shock absorbers and safety nets are simply unavailable to most poorer countries.
Its core conclusion is that no country is an island in today’s hyper-interconnected world, that global crises require global responses, and that strengthening resilience requires more global trade and economic cooperation, not less.
This is by far the loudest (empirical) riposte to recent inward-looking political narratives along the lines of de-globalization, reshoring and decoupling. Even in the middle of the pandemic, trade has turned out to be a solution, not a problem. Indeed, tariffs have recently been inflationary within the U.S. economy, hurting both domestic manufacturers and consumers.
The WTO report leaves us with two main takeaways. First, this may be another reason why trading nations must reinstate the WTO’s dispute settlement mechanism so as to monitor and discipline oft-destructive domestic trade politics. The WTO may want to proactively coalesce with businesses and the civil society to make this cause heard and accepted more broadly. Second, the world and the WTO must address “development” concerns, not through typical lip services but through actually workable solutions. The Doha “Development” Round still remains unfinished, while more than three quarters of the WTO membership is comprised of developing countries. That’s scandalous!